exhibit10x1







THIS CONTRACT CONTAINS RELEASE AND INDEMNITY OBLIGATIONS



MASTER SERVICE CONTRACT



     THIS AGREEMENT (this “Contract”), made and entered into and shall be effective as of this 24th day of June, 2004, by and between the parties herein designated as “Company” and “Contractor”.


	Company:	BlueRidge Gas Partners, LLC	 
	Address:	4606 FM 1960, Suite 390	 
	 	Houston, TX 77069	 	 
	Contractor:	Verdisys, Inc.	 	 
	Address:	25025 I-45 North	 	 
	 	The Woodlands, TX	77380	 



WITNESSETH: THAT,



     WHEREAS, Company in the course of such operations regularly and customarily enters into  contracts with independent contractors for the performance of service relating thereto; and



     WHEREAS, Company desires, as a matter of company policy, to establish and maintain an  approved list of Contractors and to offer work or contracts only to those Contractors who are included on such approved list; and



     WHEREAS, Contractor represents that it has adequate equipment in good working order and  fully trained personnel capable of efficiently operating such equipment and performing services for Company.



     NOW  THEREFORE  IN  CONSIDERATION  of  the  mutual  promises,  conditions  and  agreements herein contained, the sufficiency of which is hereby acknowledged, and the specifications  and special provisions set forth in the exhibits attached hereto and made a part hereof, the parties mutually agree as follows:



1.0  AGREEMENT



Upon execution of this Contract, Company agrees that the name of Contractor shall be added to the Company’s approved list of Contractors and this Contract shall remain in force and effect until canceled by either party
by giving the other party ten (10) days prior written notice  at  the respective address of either party. If current work extends past such ten-day period, then cancellation shall not be effective until work is completed. This Contract shall control
and govern all work performed by Contractor for Company, under subsequent verbal and/or  written  work  orders. Agreement or stipulations in any such work order, delivery ticket, or other instrument, used by Contractor not in conformity with the
terms and provisions hereof shall be null and void. No waiver by Company of any of the terms, provisions or conditions hereof shall be effective unless said waiver shall be in writing and signed by an authorized officer of Company and specifically
referencing this Contract.



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2.0 LABOR, WARRANTY, EQUIPMENT, MATERIALS, SUPPLIES AND SERVICES



2.1  All work or services rendered or provided by Contractor shall be in accordance with Contractor’s proposal as
set forth in Exhibit B. Upon acceptance of same by Company, Contractor shall  commence  operations  diligently  and  without  delay,  in  strict conformity with the specifications and requirements contained herein.



2.2  Contractor shall not employ in any work for Company any employee whose employment violates any labor, employment
or other applicable laws. Contractor shall not employ in any work for Company any employee who is a minor.



2.3  All  work  or  services  rendered  or  performed  by  Contractor  shall  be  done  with  due diligence   in   a
good   and   workmanlike   manner,   using   skilled,   competent   and experienced workmen and supervisors, and in accordance with good oilfield servicing practices.



(a)  



NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED  HEREIN, THE TERMS OF THIS PARAGRAPH APPLY TO ANY SERVICES AND TO ANY EQUIPMENT RENTED OR LEASED WITH OR WITHOUT AN OPERATOR. Contractor uses its best efforts to ensure
that all service personnel furnished are competent and rental equipment is in  good  condition.      Contractor  personnel  will  attempt  to perform  the  work  requested; however, because of the nature of the work to be accomplished and
unpredictable conditions, the results of such services cannot be and are not guaranteed. Contractor warrants the services provided hereunder for a period of  thirty  (30)  days.      NO  WARRANTY  IS  GIVEN  WITH  RESPECT  TO ENGINEERING  AND
TECHNICAL  INFORMATION  FURNISHED  BY CONTRACTOR   OR   WITH   RESPECT   TO   THE   RESULTS   OF   THE SERVICES  PROVIDED  BY  CONTRACTOR.      CONTRACTOR  MAKES  NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, AS  TO THE DESIGN, OPERATION, OR
QUALITY OF THE MATERIAL OR  WORKMANSHIP OF  RENTAL  EQUIPMENT  USED  TO  SUPPLY  THE  SERVICES AND CONTRACTOR MAKES NO WARRANTY OF MERCHANTABILITY OR FITNESS OF THE EQUIPMENT FOR ANY PARTICULAR PURPOSE OR  ANY OTHER REPRESENTATION OR WARRANTY
WHATSOEVER. PROVIDED TO COMPANY HEREUNDER,



(b) 



Contractor shall have no responsibility for any materials furnished and/or specified-by Company.



(c) 



With regard to materials or equipment furnished by third party vendors and/or  suppliers, Contractor’s liability therefor shall be limited to the assignment of such third party vendor’s and/or supplier’s
warranty to Company, provided such warranties are assignable.



(d) 



NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED  HEREIN, THE  TERMS  OF  THIS  PARAGRAPH  APPLY  TO  THE  SALE  OF  ANY EQUIPMENT TO COMPANY. Contractor warrants equipment sold pursuant hereto to be free of defects in
material and workmanship for a period of one (1) year after the date  equipment  is  delivered.  The  above  warranty  does  not  apply  to  (i)  used equipment that has been repaired or worked over; (ii) equipment that has been modified or subject
to improper



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handling, storage, installation, operation or maintenance by Company, including use of unauthorized replacement parts; (iii) component parts not manufactured by Contractor, whether purchased by Contractor or furnished by
Company, such parts being subject to any applicable manufacturer’s warranty; (iv) parts requiring replacement because of natural wear and tear; (v) the design on those jobs where Contractor prepared drawings or lists from designs furnished by
others; and (vi) models or samples furnished to Company as illustrations only of general properties of equipment. Contractor’s liability for breach of this warranty is expressly limited to the repair or replacement, at its sole option, of any
equipment or parts of equipment which prove to be defective during the warranty period. THIS LIMITED EXPRESS WARRANTY, AND THE STATED REMEDIES FOR BREACH  THEREOF,  SHALL  BE  IN  LIEU  OF  ANY  AND  ALL  OTHER WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING WITHOUT LIMITATION, WARRANTIES FOR MERCHANTABILITY OR FITNESS  FOR ANY PARTICULAR PURPOSE.



2.4  



Contractor agrees to maintain his equipment in good operating condition at all times and shall use all reasonable means to control and prevent fires and blowouts, protect the hole, and protect Company’s
equipment.



2.5  



Notwithstanding anything to the contrary contained herein, except when Contractor’s equipment is lost or damaged as a result of the sole negligence of Contractor, Company agrees to defend, indemnify and hold Contractor
harmless from the loss of  or  damage  to Contractor’s tools or equipment occurring in the hole, or in the drill string below the level of the rotary table. Company will replace such tools/equipment or reimburse Contractor with  the  current
replacement  cost  new.      Should  Company  decide to replace lost or damaged tools/equipment, the replaced items should be new and purchased or obtained from a reputable manufacturer and should meet all original equipment manufacturer’s
specifications. Company agrees to reimburse Contractor for the cost of repair to such tools and equipment that are damaged other than from  normal wear-and-tear during the rental period.  However, before any major repairs are made to damaged
equipment, approval for such repairs must be secured from an authorized representative of Company. Company shall not be responsible   if  Contractor’s  tools/equipment  is  damaged  as a  result  of  Contractor’s negligent acts and/or
omissions.



2.6  



Notwithstanding anything to the contrary contained herein, it is expressly agreed and understood that in the event Contractor’s equipment is leased or rented to Company pursuant to the Contract and is not returned or
is damaged beyond repair, Company  will replace such equipment or reimburse Contractor with the current replacement cost new of such equipment. Should Company decide to replace lost or damaged assets, the replaced items should be new and purchased
or obtained from a reputable manufacturer and should meet all original equipment manufacturer’s specifications. Company agrees to reimburse Contractor for the cost of repair to such tools and equipment that are damaged other than from normal
wear-and-tear during the rental  period.  However, before any major repairs are made to damaged equipment, approval for such repairs must be secured from an authorized representative of  Company.    Company  shall  not  be  responsible  to  the
extent  that  Contractor’s equipment is damaged as a result of Contractor’s negligent acts and/or omissions.



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3.0	PAYMENT



3.1



Once credit is established, normal terms will be net thirty (30) days after receipt of an invoice. The Company shall pay Contractor at the rate stipulated in the Exhibit B provided for herein, subject to same being accepted
by Company as fully complying with all the terms, conditions, specifications and requirements of this Contract. Should company not meet contractor’s credit criteria, prepayment may be required.



3.2  



Company shall have the right to audit Contractor’s books and records relating to all invoices issued pursuant to this agreement. Contractor agrees to maintain such books and records for a period of two (2) years from
the date such costs were incurred and to make such books and records available to Company at any time or times within such two (2) year period.



3.3



In the event that Company’s account with Contractor becomes delinquent, Contractor has the right to revoke any and all discounts previously applied in arriving at the net invoice price. Upon revocation, the full
invoice price without discount will become immediately due and owing and subject to collection. Notwithstanding anything herein to the contrary, Contractor may file liens if Company fails to pay Contractor’s valid charges as required by this
Contract or any court order.



4.0  REPORTS TO BE FURNISHED BY CONTRACTOR



4.1  



The quantity, description and condition of the materials and supplies and/or services furnished shall be verified and checked by Contractor, and all delivery tickets shall be properly certified as to receipt by
Contractor’s representative. Contractor must obtain approval of Company’s representative on the well site of delivery tickets for materials and supplies for which Contractor is to be reimbursed by Company.



4.2



Contractor shall immediately orally report to Company, as soon as practicable followed by an appropriate written report, all accidents or occurrences resulting in death or injuries to Contractor’s employees, agents or
third parties, or damage to property of Company or third parties arising out of or during the course of work to be performed hereunder. Contractor shall furnish Company with a copy (within ten days) of all records made available by Contractor to
Contractor’s insurer or governmental authorities or to others of such accidents and occurrences.



5.0  REPORTS TO BE FURNISHED BY COMPANY



Company   will   furnish   contractor   with   relevant   production   data   available   prior   to commencement of project as well as relevant post project production data. Contractor will obtain Company’s approval
prior to any public disclosure of said project production data.



6.0  INDEPENDENT COMPANY RELATIONSHIP



In the performance of any work by Contractor for Company, Contractor shall be deemed to be  an independent contractor, with the authority and right to direct and control all of the details of the work, Company being
interested only in the results obtained. However, all work contemplated shall meet the approval of Company and shall be subjected to the general right of inspection. Company shall have no right or authority to supervise or give instructions to the
employees, agents, or representative of Contractor, but such employees, agents or representatives at all times shall be under the direct and sole supervision and control of



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Contractor. Any suggestions or directions given by Company or its employees shall be given only to the superintendent or other person in charge of Contractor’s crew, provided however, that in the event any employee of
Company should give any order or instructions to the employees of Contractor (which employee of Company shall not in any event be authorized to  do) and such order is not countermanded by Contractor’s superintendent or other person in charge of
Contractor’s employees or crew, it shall be deemed that such orders or instructions are the orders or instructions of Contractor. It is the understanding and intention of the parties hereto that no relationship of master and servant or
principal and agent shall exist between Company and the employees, agents, or representatives of Contractor, and that all work or services covered hereby shall be performed at the sole risk of Contractor.



7.0  INDEMNITY OBLIGATIONS



7.1  Definitions. The following terms shall have the designated definitions.




(a) 



 Company Group includes, individually or in any combination, Company, its affiliates, contractors (other than Contractor) and entities for whom
Company  is performing services and each of their respective directors, officers agents,  representatives, employees and invitees.



(b)



  Contractor Group includes, individually or in any combination, Contractor,  and its affiliates and contractors, and each of their respective directors, officers, agents, representatives, employees and invitees.



(c)



 Defend – the obligation of the indemnitor (i) to defend the indemnitees at its  sole expense, or at the indemnitees’ election (ii) to reimburse the indemnitees  for  the  indemnitees’ reasonable  expenses  incurred  in  defending  themselves.    Notwithstanding the indemnitee’s election of option (i)
above, the indemnitee shall be entitled to participate in its defense at its sole cost.



(d) 



 Losses – claims, demands, causes of action, losses, judgments, liabilities,  indemnity obligations, costs, damages or expenses of any kind and character (including attorney’s fees and other legal expenses).



6.2



Contractor. Contractor shall release, defend, indemnify, and hold harmless Company Group from and against any and all Losses arising out of bodily injury or death or property damage
or loss (including patent or license infringement resulting from the use of the Contractor Group’s property) suffered by any of the Contractor Group in connection with this Contract,



REGARDLESS OF WHETHER CAUSED OR  CONTRIBUTED TO BY THE SOLE, JOINT OR CONCURRENT NEGLIGENCE (IN ANY AMOUNT), STRICT LIABILITY OR OTHER FAULT OF ANY
MEMBER OF COMPANY GROUP.



6.3 



Company. Company shall release, defend, indemnify, and hold harmless Contractor Group from and against all Losses arising out of bodily injury or death or property damage or loss
(including patent or license infringement resulting from the use of the Company Group’s property) suffered by any of the Company Group in connection with this Contract,



REGARDLESS OF WHETHER CAUSED OR  CONTRIBUTED TO BY THE SOLE, JOINT OR CONCURRENT NEGLIGENCE (IN ANY AMOUNT), STRICT LIABILITY OR OTHER FAULT OF ANY
MEMBER OF CONTRACTOR GROUP.



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6.4 



Insurance Support/Limitation.  The mutual indemnity obligations in Sections 6.2 and  6.3 above shall be
supported by insurance provided by the parties hereto in the amounts and the types described in Exhibit A. Notwithstanding anything in this Contract to the contrary, (i) in the event enforcement of Sections 6.2 and/or 6.3 above  is governed by the
Texas Anti-Indemnity Statute (Tex. Civ. Prac. & Rem. Code Ann.  Secs. 127.001-127.007 (1986 & Supp. 1996) as amended) or similar statute in another  jurisdiction, and (ii) to the extent the indemnified Losses under such Section 6.2 or  6.3,
as applicable, result from the indemnitee’s negligence, then the obligations of the indemnitor under such Section 6.2 or 6.3, as applicable, shall be limited to the extent of insurance required to be provided by both parties pursuant to this
Section 6.4 (or any such greater amount allowed by law).



6.5 



NOTWITHSTANDING   ANYTHING   TO   THE   CONTRARY   CONTAINED HEREIN,   COMPANY   HEREBY   AGREES   TO   ASSUME   THE   ENTIRE RESPONSIBILITY  AND  LIABILITY  FOR,  AND  AGREES  TO  RELEASE, DEFEND, INDEMNIFY AND HOLD
CONTRACTOR HARMLESS FROM AND AGAINST  ALL  CLAIMS,  LIABILITIES,  DAMAGES  AND  EXPENSES (INCLUDING WITHOUT LIMITATION ATTORNEYS’ FEES, COURT COSTS, EXPERT WITNESS FEES AND ANY OTHER COST OF DEFENSE)  FOR  AND ARISING OUT OF THE FOLLOWING
SPECIFIED TYPES OF CLAIMS, LOSSES OR EVENTS:  


	1.
  	LOSS OR LIABILITY FOR DAMAGES OR AN EXPENSE ARISING FROM PROPERTY INJURY THAT RESULTS FROM RESERVOIR OR UNDERGROUND DAMAGE, INCLUDING LOSS OF OIL, GAS, OTHER MINERAL SUBSTANCE, OR WATER OR THE
WELLBORE ITSELF; OR

	2.
  	LOSS OR LIABILITY FOR DAMAGES OR ANY EXPENSE ARISING FROM COST OF CONTROL OF WILD WELL, UNDERGROUND OR ABOVE THE SURFACE.




THIS   OBLIGATION   TO   INDEMNIFY,   DEFEND   AND   RELEASE   APPLIES REGARDLESS OF WHETHER OR NOT THE CLAIM OR LOSS IS OCCASIONED   BY   OR   RESULTS   FROM   THE   ACTUAL   OR   ALLEGED NEGLIGENCE OF CONTRACTOR OR ANY
OTHER PERSON, OR ENTITY, IN WHOLE OR IN PART, WHETHER SOLE, JOINT, ACTIVE OR PASSIVE, EXCEPT TO THE EXTENT THE CLAIM OR LOSS IS DUE TO CONTRACTOR’S  SOLE NEGLIGENCE, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.



6.6.



NOTWITHSTANDING THE FOREGOING, CONTRACTOR SHALL HAVE SOLE RESPONSIBILITY AND LIABILITY FOR THE CONTROL AND REMOVAL OF AND SHALL HOLD COMPANY HARMLESS FROM PROPERTY LOSS OR DAMAGE, FINES AND/OR PENALTIES FROM SUCH POLLUTION
OR CONTAMINATION THAT RESULTS FROM SPILLS OF FUELS, LUBRICANT, MOTOR OILS, PIPEDOPE, PAINTS, SOLVENTS, BALLAST, BILGE, METALLIC OBJECTS AND



GARBAGE IN CONTRACTOR’S SOLE POSSESSION OWNERSHIP,



REGARDLESS OF WHETHER OR NOT OCCASIONED BY OR RESULTING FROM THE NEGLIGENCE, STRICT LIABILITY, BREACH OF WARRANTY OR OTHER FAULT OF COMPANY, IN WHOLE OR IN PART, WHETHER SOLE, JOINT, ACTIVE OR PASSIVE. THE INITIATION OF
CLEAN-UP OPERATIONS AND CONTROL, REGARDLESS	OF



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INCLUDING CONTROL, RESPONSE AND REMOVAL, BY EITHER PARTY SHALL NOT BE AN ADMISSION OF ASSUMPTION OF LIABILITY BY THE INITIATING PARTY OR PARTIES.



6.7



Indirect or Consequential Damages. The parties hereto waive and release all claims  against the other party
for indirect, special, punitive or consequential damages arising  out    of    this Contract, REGARDLESS OF WHETHER CAUSED OR  CONTRIBUTED
TO BY    THE SOLE,  JOINT  OR  CONCURRENT  NEGLIGENCE (IN   ANY AMOUNT),   STRICT   LIABILITY   OR   OTHER  FAULT  OF  ANY    OF  THE OTHER PARTY. As used herein, “indirect or  consequential damages” shall include, but not be limited to, loss of revenue, profit or use of capital, production delays, loss of product, reservoir  loss  or  damage,  losses  resulting  from
 failure  to  meet  other  contractual commitments or deadlines and downtime of facilities or vessels.  



6.8



No Limit. Except as otherwise provided herein, the foregoing indemnity obligations  shall not be limited to
the amount of insurance of the parties.  



6.9 



The provisions of this Section shall extend to and be enforceable by and for the benefit of Contractor Group and Company Group.



6.10



During the term of this Contract, Contractor and its subcontractors or their officers, directors and employees may have occasion to be upon or about property, platforms, vessels, equipment or other premises belonging to or
under the control of or in the possession of or under contract to Company while performing services for another company or while in transit between a vessel and another location. In such event, Contractor’s and Company’s indemnification
rights and obligations under this Contract shall apply to the same extent as if Contractor had been employed at the request of or for the benefit or account of Company.



6.11



 Should  Louisiana  law  be  applicable  to  this  Contract  and  the  activities  performed hereunder,  Contractor  and  Company  agree  to  recognize  Company  as  the  statutory employer
of employees of Contractor while such employees are performing services  to be supplied by Contractor under this agreement. This provision is included for the sole purpose of establishing a statutory employer relationship to gain benefits expressed
in La. Rev. Stat. 23:1031 (C-E) and La. Rev. Stat. 23:1061 (A) and is not  intended to create an employer/employee relationship for any other purpose.



7.0	INSURANCE



Contractor  shall  carry  insurance  (with  reliable  insurance  companies  that  are  satisfactory  to Company) in the amounts set forth in Exhibit A, such insurance to be effective prior to the commencement of any work
under this Contract. In each such policy, to the extent of the liabilities agreed to be assumed by Contractor, Contractor shall cause (i) all deductibles to be  for Contractor’s account, (ii) the insurer to waive all rights of subrogation
against Company Group, (iii) Company Group to be listed as additional insureds, and (iv) such policy to be primary as to any other existing valid and collectible insurance of Company Group or otherwise. Before engaging in any work hereunder,
Contractor shall furnish Company an executed Certificate of Insurance (in form satisfactory to Company) evidencing the foregoing insurance. Contractor shall cause each insurer to agree to give Company at least thirty (30)  days written notice of
cancellation or expiration of any such policies or of any other changes



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that would materially reduce the limits of coverage of such policies. Notwithstanding any provision herein to the contrary, failure to secure the insurance coverage, or the failure to comply fully with any of the insurance
provisions of this Contract, or the failure to secure such endorsements on the policies as may be necessary to carry out the terms and provisions of this Contract, (x) shall in no way act to relieve Contractor from the obligations of this Contract,
and (y) shall constitute grounds for the immediate termination of this Contract by Company (in addition to any other rights or remedies available to the Company).



8.0  THIRD PARTY BENEFICIARIES



Except as provided in Section 6.9 above with regard to Company Group and Contractor Group, nothing herein shall be construed to confer any benefit on any third party not a party to this Contract nor to provide any rights to
such third parties to enforce the provisions hereof.



9.0  TAXES AND CLAIMS



9.1  



Contractor agrees to pay all taxes, licenses, and fees levied or assessed on Contractor in connection   with   or   incident   to   the   performance   of   this   Contract   by   any governmental agency and unemployment
compensation insurance, old age benefits, social security, or any other taxes upon the wages of Contractor, its agents, employees, and representatives.  Contractor agrees to require the same agreements and  be liable for any breach of such
agreements by any of its sub-Contractors.



9.2  



Contractor   agrees   to   reimburse   Company   on   demand   for   all   such   taxes   or governmental  charges,  State  or  Federal,  that  Company  may  be  required  or  deem  it necessary  to  pay  on  account  of
employees  of  Contractor  or  its  sub-Contractors. Contractors agrees to furnish Company with the information required to enable it to make the necessary reports and pay such taxes or charges. At its election, Company is authorized to deduct all
sums so paid for such taxes and governmental charges from  such amounts as may be or become due to Contractor hereunder.



9.3  



Contractor agrees to pay all claims for labor, materials, services, and supplies furnished to Contractor hereunder and agrees to allow no lien or charge to be fixed upon the rig, the lease, the well, the land on which the
well is located, or other property of Company or the party for whom Company is performing services with respect to such claims. Contractor agrees to indemnify, protect, defend, and hold Company harmless from and against all such claims, charges, and
liens.  If Contractor  shall  fail  or  refuse  to  pay  any  claims  or indebtedness incurred by Contractor in connection with the services provided hereunder, it is agreed that Company shall have  the right to pay any such claims or indebtedness
out of any money due or to become due to Contractor hereunder. Notwithstanding the foregoing, Company agrees that it will not pay any such claim or indebtedness as long as same is being actively contested by Contractor and Contractor has taken all
actions necessary (including the posting of a bond when appropriate) to protect the property interests of Company or any other party affected by such claim or indebtedness.



9.4  



Before payments are made by Company to Contractor, Company may require Contractor to furnish proof that there are no unsatisfied claims for labor, materials, equipment, and supplies or for injuries to persons or property
not covered by insurance.



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10.0  LAWS, RULES AND REGULATIONS



10.1



 Company and Contractor respectively agree to comply with all laws, rules, and regulations which are now or may become applicable to operations covered by this Contract or arising out of the
performance of such operations. If either party is required to pay any fine or penalty resulting from the other party’s failure to comply with such laws, rules, or regulations, the party failing to comply shall immediately reimburse the other
for any such payment.



10.2 



In the event any provision of this Contract  is inconsistent with or contrary to any applicable law, rule, or regulation, said provision shall be deemed to be modified to the extent required to comply with said law, rule,
or regulation, and this Contract as so  modified, shall remain in full force and effect.



10.3 



This Contract shall be governed, construed and interpreted in accordance with the laws of Texas.



11.0  FORCE MAJEURE



Except for the duty to make payments hereunder when due, and the indemnification provisions under this Contract, neither Company nor Contractor shall be responsible to the other for any delay, damage or failure caused by or
occasioned by a Force Majeure Event. As used in this Contract, “Force Majeure Event” includes, but is not limited to: acts of God, action of the elements, warlike action, insurrection, revolution or civil strife, piracy, civil war or
hostile action, strikes, differences with  workers,  acts  of  public  enemies,  federal  or  state  laws, rules and regulations of any governmental authorities having jurisdiction in the premises or of any other group, organization or informal
association  (whether  or  not  formally  recognized as a government); inability to procure material, equipment or necessary labor in the open market, acute and unusual labor or material or equipment shortages, or any other causes (except financial)
beyond the control of either party. Delays due to the above causes, or any of them, shall not be deemed to be a breach of or failure to perform under this Contract. Neither Company nor Contractor shall be required against its will to adjust any
labor or similar disputes except in accordance with applicable law.



12.0  PATENTS



In addition to all other indemnity provisions contained herein, Contractor represents and warrants that the use or construction of any and all tools and equipment furnished by Contractor and used in the work provided for
herein does not infringe on any license or patent issued or applied for, and Contractor agrees to indemnify and hold Company harmless from  any and all claims, demands, and causes of action of every kind and character in favor of or made by an
patentee, licensee, or claimant of any rights or priority to such tool or equipment, or the use or construction thereof, that may result from or arise out of furnishing or use of any such tool or equipment by Contractor in connection with the
work.



13.0  ASSIGNMENTS



Company and Contractor agree that neither will assign or delegate this Contract or any of the work or services required hereunder, except for work normally performed by Contractors, and not to assign any sum that may accrue
to Contractor hereunder, without prior written consent of the other party. If any  assignment  by  Company  is  made  that  significantly  alters  Contractor’s financial burden, Contractor’s compensation shall be adjusted to give effect to
 any change in Contractor’s operating costs.



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14.0  TERMINATION OF WORK



14.1 



 Company may, with 30 days written notification, in its sole discretion, terminate work covered by any work order, oral or written, issued hereunder, in which event Contractor shall be paid
at the applicable rates stipulated in Contractor’s Rate Schedule or Bid for services rendered up to the date of such termination. In no event shall Contractor be entitled to be paid prospectively for work unperformed by reason of such
termination, nor shall Contractor be entitled to any other compensation or damages for loss of anticipated profits or otherwise. On notice of such termination, Contractor shall promptly remove its personnel, machinery, and equipment from the
location and shall further cooperate with Company or its designee to ensure an orderly and expeditious transition and completion of the work.



14.2 



 The foregoing paragraph shall in no way limit (other than compensation for goods and/or services already provided) Company’s right to terminate Contractor without additional
compensation in the event of Contractor’s breach of this Contract.



15.0 GIFTS AND GRATUITIES



It is considered to be in conflict with the Company’s interest for its employees or any member of their immediate family to accept gifts, payments, extravagant entertainment, services, or loans in any form from anyone
soliciting business, or who may already have established business relations with the Company. Gifts of nominal value and entertainment, meals, and social invitations that are customary and proper under the circumstances and do not place the
recipient under obligation are acceptable. If any employee of the Company should solicit a gift or gratuity from the Contractor, Contractor hereby agrees to notify an officer of the Company of such act. It is agreed that the Company will hold such
notification in confidence. It is further understood that failure by the Contractor to comply with the Company’s policies regarding gifts and gratuities may, at the Company’s option, result in the termination of this Contract and may
further preclude any future dealings between the parties.



16.0 ILLEGAL DRUGS, ALCOHOL, AND FIREARMS



16.1 



 To help insure a safe, productive work environment, Company may establish a program designed to prohibit the use, transportation and possession of firearms, drugs and/or controlled
substances, drug paraphernalia and alcoholic beverages on drilling locations, or Company’s other premises. Illegal drugs include marijuana, amphetamines, barbiturates, opiates, cocaine, codeine, morphine, hallucinogenic substances (LSD) and any
similar drugs and/or chemicals synthetics deemed hazardous by Company.



16.2 



 Such programs, if established, upon notice shall apply to Contractor’s employees, agents, servants and Contractors.



16.3 



 Company   specifically   reserves   the   right   to   carry   our   reasonable   searches   of individuals, their personal effects, and vehicles when entering on and leaving



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Company’s  premises.      The  searches  will be  initiated  by  Company  without  prior announcement. Individuals found in violation will be removed from Company’s premises immediately. Submission to such a
search is strictly voluntary; however, refusal may be cause for not allowing that individual on the wellsite or Company’s  other  premises.      It  is Contractor’s responsibility to notify its employees of this prohibition and its
enforcement.



17.0 GOVERNMENT REGULATIONS



The following regulations, where required by law, are incorporated in the agreement by reference as if fully set out.


	(1)
  	The Equal Opportunity Clause prescribed in 41CFR 60-1.4;

	(2)
  	The Affirmative Action Clause prescribed in 41 CFR 60-250.4 regarding veterans and veterans of the Vietnam era;

	(3)
  	The Affirmative Action Clause for handicapped workers prescribed in 41 CFR 60- 741.4;

	(4)
  	The Certification of Compliance with Environmental Laws prescribed in 40 CFR 15.20.




18.0 SPECIAL PROVISIONS



This Contract sets forth the entire agreement between Company and Contractor with respect to  its subject matter. All prior negotiations and dealings regarding the subject matter hereof are superseded by and merged into the
Contract, including any existing Master Service Contracts between Company and Verdisys, Inc. or any of its subsidiaries or divisions. No modification of this Contract shall be effective unless made in writing and signed by both parties.



19.0 NOTICES


	Company:	BlueRidge Gas Partners, LLC
	 	4606 FM 1960, Suite 390
	 	Houston, TX 77069
	 	Office: 281-880-8080
	 	Fax: 281-880-6556
	Contractor:	Verdisys Inc.
	 	25025 I-45, Suite 525
	 	The Woodlands, Texas 77380
	 	Office: 281-364-6999
	 	Fax: 281-364-8007



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20.0 ACCEPTANCE OF CONTRACT



IN WITNESS WHEREOF, the parties hereto have executed this Contract upon the date above shown in several counterparts, each of which shall be considered as an original.


	COMPANY	 
	 	 
	   By:	/s/ T. Pat Harrison
	 	

	   Title:	Member
	 	

	   Date:	06-24-04
	 	

	 	 
	CONTRACTOR	 
	 	 
	   By:	/s/ David M. Adams
	 	

	   Title:	President and Co-CEO
	 	

	   Date:	6/28/04
	 	




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INSURANCE



Exhibit A



Contractor shall carry insurance (with reliable insurance companies that are satisfactory to Company) in the minimum amounts set forth below, such insurance to be effective prior to the commencement of any work under this
Contract. In each such policy, to the extent of the liabilities agreed to be assumed by Contractor, Contractor shall cause (i) all deductibles to be for Contractor’s account, (ii) the insurer to waive all rights of subrogation against Company
Group, (iii) Company Group to be listed as additional insureds, and (iv) such policy to be primary as to any other existing valid and collectible insurance of Company Group or otherwise. Before engaging in any work hereunder, Contractor shall
furnish Company an executed Certificate of Insurance (in form  satisfactory to Company) evidencing the foregoing insurance. Contractor shall cause each insurer to agree to give Company at least thirty days written notice of cancellation or
expiration of any such policies or of any other  changes that would materially reduce the limits of coverage of such policies.  Notwithstanding any provision  herein to the contrary, failure to secure the insurance coverage, or the failure to comply
fully with any of the insurance provisions of this Contract, or the failure to secure such endorsements on the policy as may be necessary to carry out the terms and provisions of this contract, (x) shall in no way act to relieve Contractor  from the
obligations of this Contract, and (y) shall constitute grounds for the immediate termination of this  Contract by Company (in addition to any other rights or remedies available to the Company).


	1.
  	Workers’ Compensation insurance to the full extent required by all laws applicable in any jurisdiction in which the Work is to be performed or the contracts of employment for Contractor’s
employees are made or expressed to be made. The Employer’s Liability Insurance shall not be less than $1,000,000.

	2.
  	Comprehensive or Commercial General Liability insurance for any incidents or series of incidents covering the operations of the Contractor in the performance of the contract, in an amount of not less
than $1,000,000.

	3.
  	Automobile Bodily Injury and Property Damage Liability Insurance extending to owned, non-owned, and hired automobiles used by Contractor in the performance of this Contract in the amount of not less than
$1,000,000.




Excess Liability Insurance over and above the coverages listed above in the amount of not less than $2,000,000.



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RADIAL DRILLING OPTIMIZATION SERVICES 



EXHIBIT “B” 



Verdisys, Inc. (“Verdisys”) to conduct lateral drilling services for BlueRidge Gas Partners, LLC et al (“BlueRidge”) in the West Virginia operating area. This work will be performed pursuant to the terms and
conditions of that certain Master Service Contract that was entered into by our companies on this 24th day, of June,2004, except as modified herein. 



(a) 



Work Scope:  



1.  



A pilot project consisting of a minimum of one to eight-wells with approximately 10 to 15 zones. Verdisys will jet-drill laterals up to 300’ each in wells selected by BlueRidge at depths determined by BlueRidge. Well depths
will not exceed 6,000’ measured depth from the ground surface. 



(b) 



Commercial Terms:



1.



BlueRidge will pay $15,000 seven (7) days prior to Verdisys mobilizing the lateral drilling unit to West Virginia. Thereafter, BlueRidge will pay the estimated cost of each well prior to spudding the lateral drilling unit on the
well location selected by BlueRidge. The estimated cost per well, based on the information supplied by BlueRidge is: 2 days - $25,000. 


	Verdisys to provide:	Esperada to provide:
	- Verdisys Lateral Drilling Unit w/ crew	- Pulling unit
	- Verdisys lateral drilling equipment	- Wireline/logging unit
	- Fuel and consumables for Verdisys unit	- 2  ” tubing string set at depth
	 	- Lubricator/BOP (if required)
	 	- Jetting fluid plus specialty additives
	 	




Rate schedule:


	 	Day Rate	- $12,500 – Verdisys works or is available
	 	 	 	to work a minimum of 8 hours and a
	 	 	 	maximum of 10 hours per day
	 	o	Standby Rate	- $6,250 – Verdisys unable to work due to
	 	 	 	unsafe weather conditions or if BlueRidge
	 	 	 	chooses not to work weekends
	 	o	Repair Rate	- Verdisys shut down due to Verdisys
	 	 	 	surface equipment repair
	 	 	 	(Day Rate prorated to 8 hour work day)
	 	Mobilization/demobilization	- $15,000 (Roundtrip)
	 	3rd party equipment/services provided at cost plus 15%
	




ACCEPTED BY: 


	BLUERIDGE
	By: T. Pat Harrison
	

	Title: Member
	

	Date: 06/24/04
	



	VERDISYS
	   By: /s/ David M. Adams
	

	   Title: President & Co-CEO__
	

	   Date: 6/28/04